CANADA FX DEBT-C$ weakens after U.S. GDP disappoints
* Canadian dollar at C$1.0972 or 91.14 U.S. cents * Bond prices higher across the maturity curve By Leah Schnurr TORONTO, April 30 (Reuters) - The Canadian dollar weakened against the greenback on Wednesday, giving back some of Tuesday's gains as investors took in a slew of economic data on both sides of the border, including Canadian economic growth figures for February that came in as expected. The domestic economy grew by 0.2 percent in February, expanding for the second month in a row, data showed. A separate report showed producer prices rose by a slightly less than expected 0.4 percent in March. But in the United States, the economy barely grew in the first quarter, cooling to its slowest pace of expansion since the fourth quarter of 2012. That weighed on the loonie as it dented hopes that a strengthening economy in the United States will help boost Canada's economy. "This is one of those strange instances where the weakness in the U.S. number seems to have driven a bit more of a flight to quality," said David Tulk, chief Canada macro strategist at TD Securities in Toronto. "Unfortunately, that does come at the expense of Canada." Tulk said that U.S. economic sectors that were weak in the first quarter are the ones that must strengthen if the Canadian economy is to rotate to export-led growth, as the Bank of Canada desires. "It's those sectors that do tie quite closely to Canadian exports, so it's definitely a step back in that rotation narrative that is very much at the center of the Bank of Canada's expectation." The Canadian dollar was at C$1.0972 to the greenback, or 91.14 U.S. cents, weaker than Tuesday's close of C$1.0951, or 91.32 U.S. cents. The currency was hovering around its 100-day moving average after breaking through it on Tuesday. Investors were turning their focus to events later in the day in both Canada and the United States. South of the border, the Federal Reserve will release a statement at the conclusion of a two-day policy-setting meeting. The Fed is expected to continue winding down its economic stimulus program, which has typically boosted the U.S. dollar to the detriment of the loonie. At home, Bank of Canada officials will appear on Parliament Hill for a second day of questioning. During a question and answer session on Tuesday, Governor Stephen Poloz said he remains open to the possibility of an interest rate cut and that the Canadian dollar was still high in historical terms, despite its recent depreciation. Canadian government bond prices were higher across the maturity curve, with the two-year up half a Canadian cent to yield 1.079 percent and the benchmark 10-year up 22 Canadian cents to yield 2.419 percent. (Editing by Peter Galloway)
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